The investment bank is fat and happy again, but you wouldn't know it from its squabbling with the Treasury over the warrants in the TARP deal.

NEW YORK (Fortune) -- I've always thought that the guys running Goldman Sachs were really smart, not only about making money, but also about projecting a classy image to the world outside
of Wall Street. Clearly, I overestimated them.

If there was ever a firm with the motivation -- and the money -- to be gracious to the U.S. taxpayers who kept it alive when the financial markets were imploding, it's Goldman. It had a
chance to look good and do good for taxpayers and itself and Wall Street for a relative pittance -- and has blown it. Horribly.

As you have probably noticed, Goldman is getting attacked for posting record
profits and setting aside a record amount for employee compensation about three seconds after it repaid its $10 billion of loans from the Troubled Asset Relief Program. Repaying those
loans freed Goldman from pay restrictions on its top honchos, who seem headed for record or near-record bonuses unless things go badly for the firm in the second half of the year.

What you probably don't know is that Goldman, flush with cash and profits, is squabbling with the Treasury about how much it should pay taxpayers to buy back the stock purchase warrants
it gave the government as part of the TARP deal. Talk about tacky.

Had Goldman retained something it was once reputed to have -- a sense of short-term sacrifice in return for long-term profit -- it would have agreed to pay the government generously for
the warrants. It could have announced that on Tuesday, along with its profits, and looked like a decent, concerned corporate citizen instead of Greedhead Central.

The warrants are very valuable, especially with the recent sharp run-up in Goldman's stock price. The warrants carry the right (but not the obligation) to buy 12.2 million Goldman
(GS, Fortune 500) shares at $122.90 each. Goldman's closing price of $156.84 yesterday
put the warrants "in the money" by a bit over $400 million. (That's the $33.94 difference between $156.84 and $122.90, multiplied by 12.2 million.)

Given that the warrants still have more than nine years to run, they're clearly worth more than $400 million, because its owner has years of upside. However, because there's no existing
market for such long Goldman warrants, their value is in the eye of the beholder (and the pricing modeler).

Alas, no one would tell me what the government is asking for the warrants or what Goldman is offering for them. "We are in discussions with the Treasury on the buyback of the warrant,"
said Goldman spokesman Lucas VanPraag. "The purchase price has yet to be determined.... We believe that taxpayers should get a decent return, and we hope that our discussions with the
Treasury will do just that." The Treasury declined comment.

My estimate -- okay, my SWAG (for scientific wild-assed guess) -- is that the Treasury is asking for $1 billion to $1.5 billion and Goldman is offering $500 million or so.

Under the law, Goldman, like other early TARP repayers, has the right to force the Treasury to sell back the warrants after a lengthy set of price arbitrations.

When I say that taxpayers kept Goldman alive, I'm not talking about the $10 billion of TARP money or the $12.9 billion of AIG (AIG, Fortune 500) bailout money that Goldman got. The $10 billion was nice, but not
necessarily essential to Goldman's survival, and Goldman says it was holding enough assets and collateral to get all or almost all of the $12.9 billion had the government not bailed out
AIG.

Rather, I'm talking about the way that U.S. and foreign governments -- in other words, taxpayers -- saved the world's financial system, saving Goldman in the process. Had many of the
world's biggest institutions collapsed, which would have happened without taxpayer aid, Goldman would have been wiped out because the firms that owed it money wouldn't have been able to
meet their obligations.

I'm also talking about the Federal Reserve Board moving with lightning speed last fall to allow Goldman to become a bank holding company. By giving Goldman access to vast amounts of money
it was making available to bank companies, the Fed ended panicky demands from Goldman customers that the firm immediately return the cash and securities it was holding for them. That was
the equivalent of a run on the bank, which no institution can survive. Stopping it saved Goldman.

Now this is how Goldman shows its gratitude. It could have shelled out a few extra bucks and done the right thing for taxpayers (and ultimately for itself) by exercising good business
judgment and looking generous. Instead, it's behaving in a way that brings to mind one of my favorite Biblical verses, Deuteronomy 32:15: "So Jeshurun waxed fat and kicked...and spurned
the Rock of his salvation." In these ultra-political days, filled with economic pain for so many Americans, that's not only the wrong way to act, it's foolish. A word I never thought I'd
associate with Goldman.